Financial performance boosted by the greenback appreciation
The improvement in net profit for this quarter has few key aspects which highlighted in the above.
The risk is that the sales volume to continue slow down in second half year.
Although Homeritz is enjoying with low material cost, there is no action taken by management to increase its inventories. Hence, I guess that the raw material price will continue to stay lower.
The increase in PBT is mainly boosted by the greenback appreciation where early year of 2019 the currency stand around RM4.09/USD compared to last year 2018 of RM3.92/USD. However, the 1HFY2019 revenue has dropped by 11.5%, accounting for 46% of previous full year revenue. I expect the EPS for the second half year to be maintained as per last year. Therefore, I can forecast that FY19 EPS would be around 7.18sen ( 3.55sen [1HFY19] + 1.54sen [Q3FY18] + 2.09sen [Q4FY18]).
The price at FY18 end was around RM0.68 with the PE value of 9.5.
Hence, my target price for Homeritz based on PE multiple of 10 for FY19 would be RM0.72.
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